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Why Tesla (TSLA) Is Down Today

Tickers in this article: TSLA

NEW YORK (TheStreet) -- Tesla Motors Inc.  was down 1.8% to $144.81 after the company announced that it would upgrade its wall charger adapters after reports of overheating in garages.

The company announced that the improved adapters would be provided to all new and current customers beginning in a few weeks. The new charger will feature an automatic shut-off in case of overheating.

"We believe (the upgraded wall charger) fully addresses the problem," the company said, in a statement. "However, to provide additional protection for Model S customers, we have designed a new wall adapter with a thermal fuse."

The Palo Alto-based electric car maker released a software upgrade in December in order to help prevent potential fires for Model S owners who plug the car into under-capacity or faulty electrical circuits. Tesla is expected to construct 21,500 Model S units this year, most of which would be sold in the U.S., with fewer in Europe, where Tesla is still creating a sales network.

As of 2:17 p.m. EST, Tesla had fallen more than 2% to hit a low of $142.25 for the day.

TheStreet Ratings team rates Tesla as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate TESLA MOTORS INC (TSLA) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio of 1.20 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, TSLA maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
  • The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 30.44%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -8.92% significantly underperformed when compared to the industry average.
  • Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • TESLA MOTORS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESLA MOTORS INC reported poor results of -$3.70 versus -$2.52 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus -$3.70).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 65.3% when compared to the same quarter one year prior, rising from -$110.81 million to -$38.50 million.
  • You can view the full analysis from the report here: TSLA Ratings Report